Running a small business in the wedding industry is exciting, but taxes can bring unexpected surprises. Whether you’re a wedding planner, photographer, caterer, or venue owner, tax season can catch you off guard if you’re not prepared. Here are some of the biggest tax surprises that wedding business owners often face—and how to avoid them.
1. Self-employment tax can be a shock
If you’re self-employed, you don’t just pay income tax – you also owe self-employment tax, which covers Social Security and Medicare. This tax is 15.3% of your net profit, and many business owners underestimate it.
💡 Surprise Factor: Many wedding professionals assume they only need to set aside income tax, but self-employment tax can significantly increase your total tax bill.
📌 How to Avoid It: Set aside a percentage of your income for taxes throughout the year to cover self-employment tax plus federal and state income taxes and be sure to stay up to date with estimated tax payments.
2. Estimated tax payments are required
Making the move from being an employee to a self-employed business owner requires an adjustment in how you pay your taxes. No longer are taxes automatically withheld from each paycheck. Instead, the IRS requires you to make quarterly estimated tax payments.
💡 Surprise Factor: If you don’t make these payments, you could owe penalties—even if you pay your full tax bill before the annual deadline.
📌 How to Avoid It: Mark your calendar for April 15, June 15, September 15, and January 15, and make estimated tax payments based on last year’s income.
3. Not all business expenses are fully deductible
While business expenses lower your taxable income, not every expense is 100% deductible. In an industry where vendors often have a lot of expenditures each month, it’s important to understand that you can’t necessarily deduct every expense even remotely related to your business.
- Meals with clients? Only 50% deductible.
- Personal use of your vehicle? Not deductible.
- Clothing for weddings? Only deductible if it’s a required uniform such as a logo shirt.
💡 Surprise Factor: Business owners sometimes deduct expenses that don’t qualify, which can lead to IRS audits and penalties, or at the very least a higher tax bill than you were expecting.
📌 How to Avoid It: Work with a CPA to understand what’s deductible and keep clear records of business-related expenses.
4. Tax season doesn’t end at the deadline
The acceptance of your tax return by the IRS can feel like a big relief, especially if you aren’t sure you did it right – but the window for potential IRS is up to three years, or even longer in some cases. If you underreport income or claim incorrect deductions, you may face penalties and interest.
💡 Surprise Factor: An audit letter can arrive years after you filed your return.
📌 How to Avoid It: Keep all receipts, bank statements, invoices, and mileage logs for at least three to seven years in case of an IRS review.
5. Hiring contractors vs. employees can create tax issues
Many wedding businesses rely on independent contractors (freelance photographers, assistants, DJs, etc.), but if the IRS determines someone should be classified as an employee, you could owe back payroll taxes, penalties, and interest.
💡 Surprise Factor: Misclassifying workers is one of the IRS’s biggest areas of enforcement for small businesses.
📌 How to Avoid It: If you control when, where, and how someone works, they’re likely an employee, not a contractor. Use 1099 forms for contractors and W-2s for employees to stay compliant.
6. Home office deductions can raise red flags
Wedding professionals who work from home may qualify for the home office deduction, but you must meet IRS rules:
✅ Exclusive Use – The space is used only for business.
✅ Regular Use – It’s your primary place of business.
💡 Surprise Factor: Using your living room or kitchen for occasional wedding planning meetings doesn’t count.
📌 How to Avoid It: Use a dedicated space and calculate the square footage used for business to claim this deduction properly.
7. Sales tax can be complicated
If you sell tangible products (wedding décor, photo albums, floral arrangements, etc.), you may need to collect and remit sales tax. Tax rules vary by state and locality, and some services (like catering or rentals) may also be taxable.
💡 Surprise Factor: Many wedding professionals don’t realize they need to handle sales tax and end up owing back taxes and fines.
📌 How to Avoid It: Check your state’s sales tax laws and charge tax on applicable sales.
This issue can be extra challenging if you operate across state lines, but working with an experienced accountant is an easy solution for staying in compliance.
Staying ahead of tax surprises
At Accountability Services, we understand that many business owners in the wedding industry are often passionate artists who are incredibly skilled at their craft but a little lost when it comes to the business side of business ownership.
We are here for you.
And no matter how scary the tax and bookkeeping mess you have created, we will guide you out of it and keep you on the right path, without judgement.
Additional resources
The Real Cost of Missing Tax Deductions for Your Wedding Industry Business
Why Wedding Industry Businesses Need a CPA
Is an S-Corp the Right Move for Your Wedding Industry Business?
